Arizona Senate Considers Compact Prohibiting Stadium Subsidies

The Arizona Senate Commerce and Public Safety Committee is considering a bill to enter the state into an interstate compact prohibiting the “use of taxpayer dollars for private professional sports stadiums and facilities” in participating states.

If Senate Bill 1453 (S.B. 1453) is approved by the Arizona Legislature, signed into law by Gov. Doug Ducey (R), and similar bills are ratified by 24 other states, the appropriation of government money for “the construction, maintenance, promotion or operation of a professional sports stadium” would be prohibited.

The ban would include any “direct funding, tax credit, tax exemption, government bond, loan, loan guarantee or any other funding mechanism that comes from state or local government.”

The committee held a February 12 hearing on S.B. 1453 but did not vote on the bill, casting doubt on its prospects.

“Too often, states and cities are put in a very difficult situation: cough up millions of dollars to the local sports team for a new stadium, or face the threat of relocation,” Petersen said.

Petersen says his bill would coordinate action among 25 states, making such negotiation tactics less effective.

“S.B. 1453 would ban the use of government funding, otherwise known as subsidies, for professional sports stadiums,” Petersen said. “However, this bill would only take effect once 24 other states pass similar legislation. This would prevent many other states from offering sweetheart deals to Arizona teams to entice them to move from the Grand Canyon State. It also takes away the argument that many make, that if our state doesn’t offer the sweetheart deal, another state will.”

United Front

Marc Poitras, an associate professor of economics at the University of Dayton, says intergovernmental coordination to stop sports stadium subsidies is a good idea.

“One way to stop the extortion is for communities to coordinate resistance so they can’t be forced into competition to provide subsidies,” Poitras said. “Short of intervention by Congress, a legal solution would seem to have to come from some sort of compact among states or cities. The fact that there is at least talk of moving in that direction is a positive development.”

‘Bad Investments for Tax Dollars’

Petersen says sports stadium subsidies are a poor use of taxpayer money.

“Even when cities spend money on new stadiums, their teams may move anyway,” Petersen said. “Just look at the [NFL football] Rams, which moved from St. Louis to Los Angeles, leaving the former state still owing millions of dollars on the football stadium. Despite the promises from sports teams and their lobbyists, the data show overwhelmingly that sports stadiums are bad investments for tax dollars.”

Eric Peterson, a senior policy analyst with Americans for Prosperity, says taxpayer money should be used to finance the core functions of government, not sports arenas.

“There’s no reason that money should be going into sports teams when it could be going to schools, roads, or police, the basic functions of government,” Peterson said.

Just Say ‘No’

Poitras says rejecting team owners’ demands for handouts would benefit the public.

“If communities could somehow resist subsidizing stadiums, taxpayers would save money, and money would also be freed up for more pressing public needs,” Poitras said. “There is considerably more healthy skepticism about stadium subsidies than existed 20 years ago, but still a long way to go.”

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